Digital real estate is any virtual property. It is divided into two categories. The first category is traditional digital real estate, such as domain names, e-commerce sites, blogs, and smartphone apps. The second category is real estate that exists in the Metaverse.
Traditional Digital Real Estate
Investing in traditional digital real estate can be profitable. Every website, e-commerce site, domain name, and app is digital property. You can build, buy, and sell it the same way you create and sell homes. You don’t need specialized Internet or smartphone knowledge to invest in traditional digital real estate.
For example, you can choose to build your own website. Building your own site requires more work than acquiring an existing website. However, acquiring a current site will require more money. You can buy existing sites on Flippa.
Flippa will tell you the asking price and the revenue each site already generates. However, you can also research to ensure the figures on Flippa are accurate. Tools, such as SEMRush, analyze the website, including its visitor numbers and other statistics.
You can also hire website brokerage firms like Ballen Brands to advise you.
If you choose to build your site, tools such as WordPress can help you. You’ll also have to buy a domain name and subscribe to a website hosting service.
How to Make Money With Traditional Digital Real Estate
You’ll have to generate traffic first to profit from traditional digital real estate such as websites. You do this by creating content and updating it regularly. You also optimize the content for search engines.
Once you’ve begun generating traffic, you can use that traffic information to make money. You can make money by
- Selling advertisements or signing up with a publishing company such as AdSense pays you money every time visitors click on an ad.
- Selling content. Advertisers will place blogs on your website in exchange for giving you money.
- Selling products on the site, such as courses or books.
- Affiliate marketing, where you recommend products on your site or blog. If people buy them based on your recommendation, you receive income.
As another example, to make money with domain names, you first determine the domain name’s value. Generally speaking, those with dot.com at the end are the most valuable. However, the creative portion of domain names can also generate profits.
For example, celebrities and businesses will sometimes buy domain names that contain their names to prevent other web users from putting porn on them or masquerading as fraudulent websites.
The Metaverse is a 3D virtual world and is also sometimes referred to as Web 3.0. About 30 percent of the world’s organizations will have products and services on the Metaverse by 2026. By 2026, the same study says that about 25 percent of people will spend about one hour a day in the Metaverse.
Metaverse refers to various technologies and often involves virtual reality or augmented reality. Using a computer, game console, or smartphone, you can visit metaverse worlds.
Several platforms exist on the Metaverse, and each has a limited amount of digital real estate in much the same way that each community on Earth has a limited number of parcels. Some platforms also have attributes such as natural resources, which are available for purchase.
Many major companies and small tech startups are working on additional technology for the Metaverse that will enable it to mimic the Earth world more closely.
How to Make Money on Digital Real Estate in the Metaverse
The Metaverse is new, so investors are still discovering ways to make money. So far, however, investors are using a few profitable schemes based on NFTs.
Nonfungible tokens (NFTs) are digital titles and represent real-world objects such as collectibles, movies, and art. The digital titles are stored on a blockchain and are bought and sold without an intermediary.
Nonfungible means unique. NFTs are becoming increasingly popular as a way to sell one-of-a-kind digital art or iconic video clips, some of which are of significant value.
Digital real estate is bought and sold using NFTs. The property is unique based on its location on a digital map, just like Earth-based property is unique because of its location on a map. Properties located next to desirable amenities generally are more valuable than those not.
Properties with specific natural resources also tend to be more valuable.
Investors can buy a digital property and hold onto it, hoping to make money through its appreciation. Investors can also buy a property and improve it to generate rental income.
For example, an investor might put apartments or a hotel on their digital property and charge rent to those who want to stay there. If the property is near a digital concert hall, the theory is that renting out hotel rooms or apartments might be quite lucrative.
Other investors will build concert halls, golf courses, art galleries, or other amenities on their property and charge others to participate. You typically buy a digital property with cryptocurrency. Cryptocurrency is a digital currency, such as Bitcoin or Ether.
One example is a partnership between Warner Music Group and a metaverse platform called Sandbox. The partnership will result in a digital concert hall where people will pay to see live concerts by popular artists that will only be available on the platform.
Another example on Sandbox is “Snoopverse,” geared toward entertainment. Snoop Dogg is building Snoopverse to be his own virtual world. According to City Signal, a user just recently bought a digital plot of land within Snoopverse for the crypto equivalent of $450,000.
The investment firm Goldman Sachs believes the Metaverse could be an $8 trillion opportunity, according to Bitcoin. This includes all sorts of Metaverse opportunities and not just digital real estate. For example, it can consist of playing games for money and designing art NFTs.
However, digital real estate, such as art galleries, concert halls, and rental properties, has the potential to generate significant income streams. Metaverse digital real estate also has the potential to appreciate, helping its investors to build wealth.
Investing in digital real estate, however, isn’t a sure thing any more than investing in Earth-based real estate is a sure thing.
Your ownership only exists as long as the Metaverse world in which you own it exists. Historically, however, many Metaverse worlds have existed for some time and potentially could exist for years, according to Motley Fool. Of course, the world could continue to exist but have little value, making real estate less valuable.
Also, the Metaverse world isn’t as coherent as the Earth-based world. Developers say that’s because it is so new.
Digital Real Estate FAQs
Is digital real estate legitimate?
Yes, digital real estate is a legitimate investment. Those investors who own assets such as stocks, bonds, and Earth-based real estate can use digital investments to diversify their portfolios further. Digital real estate also offers the potential of self-employment and the opportunity to have an additional revenue stream. On the other hand, digital assets are volatile, and savvy investing requires some skill.
Why would someone want to invest in Metaverse digital real estate?
Users will have identities within the Metaverse, similar to identities their avatars have in video games. They’ll need places to live and visit inside the Metaverse. Digital real estate will provide these places to live and visit.
Users will invest in digital real estate for the same reason they invest in Earth-based digital real estate — Return on Investment. While the properties are intangible resources, some are selling for considerable sums. One investor bought a virtual piece of land in a Tokens.com fashion district for $2.8 million.
Where can I purchase digital real estate in the Metaverse?
You can buy digital real estate directly on several platforms. One of the most popular is Decentraland. Decentraland lists several parcels of land at various prices on its marketplace. The Sandbox is another popular option. You can also buy digital real estate through third-party platforms such as OpenSea or Nonfungible.com.
How do I buy digital real estate in the Metaverse?
The first step is to set up a crypto wallet because you’ll need cryptocurrency to buy digital real estate. Crypto wallets are of three types: hosted, non-custodial, and hardware. If you buy cryptocurrency on an app such as Paypal or Coinbase, that app will host your wallet. You’ll enter some personal information and receive a password. One advantage to a hosted wallet is if you forget your password, you can still access your crypto. Self-custody wallets require that you remember your password to gain access but don’t require you to share any personal information. If your computer is hacked and someone gains access to your password, they also can access your crypto. A hardware wallet is stored on a thumb drive. It is more cumbersome but less susceptible to hacking.
The second step is to find the parcel you wish to buy. Once you find the parcel, you may have to convert your crypto to the crypto used on that platform. For example, Decentraland requires MANA for purchases. You can convert cryptocurrency using an exchange such as Changelly or Let’s Exchange.
Once you have the correct currency, you simply click on the parcel advertised on the platform and click on the buy button.
A Final Word
Digital real estate is becoming a popular investment. As with any investment, the potential to establish revenue streams and build wealth exists. However, as with any investment, some risk is involved. Research and knowledge can help you decide whether digital real estate investing meets your goals and, if so, which assets will work best.
Forbes Advisor: What Is An NFT? Non-Fungible Tokens Explained